Drought's tendency to cover thousands of square miles can leave a large footprint when it comes to impacts on the environment. Year in and year out, the characteristics of this hazard leaves agriculture especially vulnerable to drought. The odds of a major, widespread drought disrupting the yield capacity of corn (and many other commodities) in any given year is a concern now and will continue to be so in the future. Undoubtedly, this balance will become even more strained under a changing climate. Compounding the risk is the fact that higher prices, driven partly by the demand for corn by ethanol markets, has led to more acres being put into this “liquid gold” at the expense of other commodities. In addition, previously fallowed or reserve program lands are now being put into production again in order to capitalize on this spike in prices. This indirectly opens up these lands to greater erosion issues along with reducing vital habitat for many species.

The past few years has seen tremendous growth in both the building of new ethanol plants, (and in essence new markets), while driving corn prices up to historic highs. The Renewable Fuels Standard (RFS) requires an increase in ethanol production to 5.4 billion gallons a year (bgy) by 2008 and 7.5 bgy by 2012. Nearly 20% of total corn production would be required to feed this industry by 2008. This year, President Bush has challenged the industry by calling for an increase in the use of renewable fuels, mainly ethanol, to 35 billion gallons by 2012, which will replace about 20% of gasoline use.

The National Integrated Drought Information System (NIDIS) is now a reality (H.R.5136). Although in its infancy, the “NIDIS Act of 2006” (under the direction of DOC/NOAA) calls for the development of better drought and impact monitoring, assessment, and prediction and also refers specifically to a need for better drought impact reporting and documentation. This future scenario paper will look at some of the facts, issues, and hypothetical impacts surrounding the ethanol industry and try to highlight the potential vulnerability and risks drought poses to this burgeoning industry. It will also highlight how NIDIS activities might respond as the scenario is taking place.